Fed's Bullard Explains Dissent

6/21/2013 11:17AM

St. Louis Fed President James Bullard offered reasoning behind his dissenting vote at the FOMC's policy meeting, saying the Federal Reserve should have waited for more signs of economic strength. David Wessel explains.

This transcript has been automatically generated and may not be 100% accurate.

... ay ay mm mm ... all ... the MoneyBeat show we all know that the market didn't exactly like what ... the Fed chairman Ben burn Anqi this week earlier ... one of his key lieutenants also wasn't quite so please Oakley said ... the state will look at the St Louis Fed President James Bullard in a statement it was one of the two dissenters in the meeting ... this is what he think about later on the website of the St Louis Fed website ... the more prudent approach would be the way for more tangible signs ... that the economy was strengthening ... and inflation was on a path to return for Target ... that is way said what exactly does it mean how important is that they actually came out made the state is unusual Art Economics ... Editor David Wessel joins us to talk about this one ... I'd David how unusual was it for one of these dissenters to cut come out with their own statement ... well everything is unusual in that that these days any Jim Bollard the same offence president formally dissented from the statement at the meeting ... and today he basically formally dissented from the press conference that followed the me ... what usually happens is the dissenters noted in a statement ... then the explanation doesn't come for three weeks until the Mets are out ... but Mr bowler obviously felt very strongly and I suspect the markets ... plunge has reinforced his view that the Fed ... had made a big mistake this week Brock loves talk about what he said per second ... underscoring the about waiting for more signs of tangible book that miracles ... tangible economic growth ... did ... you see making a strong pointer a lot of people came out and said you know the Fed's usual too optimistic to begin with ... ah how tangible word Bullard's comments ... well I think ... I think what he said was he was just a bad his website at six am this morning and basically he says three things one is ... K guys inflation is law ... our target is two percent inflation is closer to one percent why are we talking about turning off ... the QE stake it now ... secondly he said our forecast for this year is worse than it was up three months ago if the economy isn't getting better and our outlook isn't getting better while returning this second ... and third he didn't like the idea that the Fed chairman ... in his press conference game at Timeline ... later this year we will do this ... he thinks that the Fed should only say ... we will turn the steak and a credit we will pare back quantitative easing when the economy reaches certain points let's not tied to the calendar let's tied to the economic indicators ... inflation is really interesting because he's been very it's very low obvious in some places overseas team ... to serve disinflationary trends ... I how much of a sort of ... how how big a sign of what's going on in the economy ... is that inflationary trend right now David ... I think it's really important to the day ... remember that the Fed added and that goes across the spectrum thinks that it's made its job is largely to create price stability ... for most of my lifetime ... that has referred to getting inflation down to a point where we were at something approaching stable prices ... but for the last several years ... we've been had I not balances cares about deflation falling prices ... Japan has taught us that once you get a CD for nation ... it's a little scary and it's hard to get out ... I think Jim bowler who comes from the ... St Louis Fed which has long been a bastion of mining tourism ... to saying hey if we're serious about avoiding the inflation ... if we're serious about keeping prices from going the inflation rate from going too low ... why are we sounding the alarm bell now why isn't this as bad as it would be if inflation were one point above our target ... I don't think it's a real indicator of how bad the economy is or how good the economy is ... but it's something that the Fed watches closely and Mr. Rene Kyi emphasize that in a press conference ... he said look we're watching this and if inflation or more portly expectations of future inflation don't start to move up our two percent target for to tear up this plan ... to stare back your quantitative easing in the in the end of this year ... David usually these dissenters is online to Mr. the ... that that they're talking to Santa to represent the store to outline when the deal ... is that what this is or keeping all it has been a really get burning keys here on this issue ... I think it's more of the former I'm ... I'm ... so and we did have two descents one wanted to move quicker to end the bond buying one Mr. Bullard wanted to take a long time ... ironically they're both Fed Presidents from the state of Missouri Senate ... to fail banks Kansas City and St Louis ... Mr. Bullard is a really interesting and provocative guy ... but he's never been a good indicator of where the Fed is going ... to have a look at this as a symbolic stand by our reminder that there are people on the fifth of the very quick ... to hold back tonight that that that taper quantitative easing if the economy falters and if that happens it will be other people build lovely in your ... Janet Yellen Washington Shirley Evans in Chicago Eric Rosengren of ... Boston will be saying ok the economy is doing as we expect that lets will change our plan ... right David Wessel that DC thank you very much so ...